Global shipping giant, Maersk wants to take over logistics on land, sea, and air while moving towards green energy. It has ordered 12 methanol-fueled ships from South Korean shipbuilder Hyundai Heavy Industries to be delivered in 2024 which can use either fossil fuels or low-carbon fuel called green methanol. The problem is that Maersk is not sure whether it can find enough green methanol to provide fuel for its green ships. However, in the past two years, it has used the rising freight rate to increase investment in methanol production, passing the future cost onto major customers who value green supply chains.
Maersk's challenge is to procure enough biomethanol, or extract e-methanol from green hydrogen produced from renewable electricity, to meet demand. Maersk also acknowledges, that because new fuel infrastructure and supply chain development may be uneven at first, green ships may be temporarily powered by conventional carbon-emitting fossil fuels and ships using methanol will sail the seas by 2025.
Maersk's methanol conundrum illustrates the heart of efforts to curb shipping's carbon emissions. According to foreign media analysis, little green methanol is currently produced in the world and few shipping companies have methanol-powered ships. Maersk hopes to break this deadlock by simultaneously purchasing green ships and investing in low-carbon fuel companies. If Maersk is successful, it can start an emerging market for carbon neutral ships and green fuels to power them.
In order to solve the methanol supply problem, Maersk needs to significantly increase production globally and it has actively invested in the past two years by taking advantage of huge income from rising freight rates. QUARTZ reported that biomethanol is made by fermenting landfill and agricultural waste into alcohol. Maersk acquired a minority stake in biomethanol startup WasteFuel in September last year and Maersk also invested an undisclosed amount in e-methanol startup Prometheus Fuels. In addition, Maersk placed an order with Danish company European Energy, which was enough to incentivize European Energy into building a new e-methanol plant in Denmark. This new plant is expected to open next year and supply Maersk in 2023.
As a logistics leader on land, sea, and air, Maersk must also figure out how to decarbonize trucks and planes. In the long run, Maersk hopes to use these investments to accelerate the development of alternative fuels, not only for ships, but also for Maersk air and cargo. As for the additional cost of green methanol, Maersk is also not concerned, as the cost will eventually be passed on to climate-conscious end customers such as Amazon or NIKE who need large logistics solutions.
(Image: Maersk)